Title: Does one size fit all? An empirical investigation of board structure on family firms' financial performance

Authors: Nirosha Hewa Wellalage; Stuart Locke; Frank Scrimgeour

Addresses: Waikato Management School, The University of Waikato, Private Bag 3105, Hamilton 3240, New Zealand. ' Waikato Management School, The University of Waikato, Private Bag 3105, Hamilton 3240, New Zealand. ' Waikato Management School, The University of Waikato, Private Bag 3105, Hamilton 3240, New Zealand

Abstract: The current study investigates the relationship between family firm board structure and financial performance in Sri Lanka. This study uses five years (2006-2010) of data from 65 family firms listed on the Colombo Stock Exchange (CSE). In order to investigate the impact of board structure on family firm financial performance, a dynamic panel generalised method of moment estimation is applied. The results show that board openness to non-family members, board diversity and insider ownership decrease family firms' financial performance. Consequently, this study suggests the corporate governance framework needs to be tailored to a family business structure as 'one size does not fit all'.

Keywords: family firms; board structure; corporate governance; emerging markets; family businesses; financial performance; Sri Lanka; non-family board members; board diversity; insider ownership.

DOI: 10.1504/AAJFA.2012.048248

Afro-Asian Journal of Finance and Accounting, 2012 Vol.3 No.2, pp.182 - 194

Received: 26 Nov 2011
Accepted: 01 May 2012
Published online: 06 Apr 2013 *

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